Category Archives: Tax Tips

Did you know?

That certain individuals are exempt from U.S. Social Security and Medicare taxes?

In general aliens performing services in the United States as employees are liable for U.S. Social Security and Medicare taxes. Certain classes of nonimmigrants and nonresident aliens are exempt from U.S. Social Security and Medicare taxes.

Nonresident aliens, in general, are also liable for Social Security/Medicare Taxes on wages paid to them for services performed by them in the United States, with certain exceptions based on their nonimmigrant status.

Who are they?

  • A-visas. Employees of foreign governments are exempt on salaries paid to them in their official capacities as foreign government employees.
    • The exemption does not automatically apply to servants of employees of such foreign governments.
    • The exemption does not apply to spouses and children of A nonimmigrants who are employed in the United States by anyone other than a foreign government.
  • D-visas. Crew members of a ship or aircraft may be exempt if the vessel is a foreign vessel and the employer is a foreign employer, or if the services are performed outside of the United States.
    • Crew members of an American vessel or aircraft who perform services within the United States ARE subject to Social Security and Medicare taxes.
    • Crew members of an American vessel or aircraft who perform services outside the United States ARE subject to Social Security and Medicare taxes if:
      • the employee signed on the vessel or aircraft in the United States; or
      • the employee signed on the vessel or vessel outside the United States but the vessel or aircraft touches a U.S. port while he is employed thereon.
  • F-visas, J-visas, M-visas, Q-visas. Nonresident Alien students, scholars, professors, teachers, trainees, researchers, physicians, au pairs, summer camp workers, and other aliens temporarily present in the United States in F-1,J-1,M-1, or Q-1/Q-2 nonimmigrant status are exempt on wages paid to them for services performed within the United States as long as such services are allowed by USCIS for these nonimmigrant statuses, and such services are performed to carry out the purposes for which such visas were issued to them.
    • Exempt Employment includes:
      • On-campus student employment up to 20 hours a week (40 hrs during summer vacations).
      • Off-campus student employment allowed by USCIS.
      • Practical Training student employment on or off campus.
      • Employment as professor, teacher or researcher.
      • Employment as a physician, au pair, or summer camp worker.
    • Limitations on exemption:
      • The exemption does not apply to spouses and children in F-2, J-2, M-2, or Q-3 nonimmigrant status.
      • The exemption does not apply to employment not allowed by USCIS or to employment not closely connected to the purpose for which the visa was issued.
      • The exemption does not apply to F-1,J-1,M-1, or Q-1/Q-2 nonimmigrants who change to an immigration status which is not exempt or to a special protected status.
      • The exemption does not apply to F-1,J-1,M-1, or Q-1/Q-2 nonimmigrants who become resident aliens.
  • G-visas. Employees of international organizations are exempt on wages paid to them for services performed within the United States by employees of such organizations.
    • The exemption does not automatically apply to servants of employees of such international organizations.
    • The exemption does not apply to spouses and children of G nonimmigrants who are employed in the United States by anyone other than an international organization.
  • H-visas. Certain nonimmigrants in H-2 and H-2A status are exempt as follows:
    • An H-2 nonimmigrant who is a resident of the Philippines and who performs services in Guam.
    • An H-2A nonimmigrant admitted into United States temporarily to do agricultural labor

 

Source used: www.irs.gov

 

Blog 06 11 13 – The Small Employer Health Insurance Premiums Tax Credit

Blog 06 11 13 – The Small Employer Health Insurance Premiums Tax Credit

The Small Employer Health Insurance Tax Credit (Code Sec. 45R) was created as part of the Patient Protection and Affordable Care Act, or more commonly referred to as “Obamacare”.  It is a tax credit of health insurance premiums paid by small employers.  This credit can be claimed on Form 8941 which needs to be included on the business tax return.

For tax years 2010 through 2013, small employers can receive up to 35% of premiums paid (maximum credit of $51,000), and tax exempt organizations up to 25% of premiums paid (maximum credit of $36,700).

For tax years 2014 through 2015, small employers can receive up to 50% of premiums paid (maximum credit $73,500), and tax exempt organizations up to 35% of premiums paid (maximum credit $58,800).

The amount of the credit per “Full Time Equivalent” (FTE) employees is capped at different amounts for different states.

To be eligible, a for-profit or not-for-profit small employer must; Employ fewer than 25 Full Time Equivalents, have average annual compensation of less than $50,000, and provide health insurance coverage for its employees.

When calculating FTE for purposes of the credit, owners, owners’ family, and seasonal employees who work fewer than 120 days are not considered.  However, the premiums for seasonal workers are included.

Employers who also employee household or non-business employees must also include them in the FTE count.

The definition for health insurance is: Benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise) under any hospital or medical service policy or certificate, offered by a licensed health insurance company.

It can include dental or vision plans, long term care, nursing home plans, Medicare supplement, and others (please see IRS site for complete listing).

It does not include HSAs, HRAs, Credit-only insurance, coverage for on-site medical clinics, automobile medical payment insurance, coverage only for accident, or liability insurance.

For more information visit our website at www.dncpas.com or give one of our accountants a call at 239-261-8337. Davidson and Nick CPAs has been serving Southwest Florida in helping individuals and businesses as CPAs and most trusted advisor since 1989.

Identity Theft, Tax Fraud, and Phishing

March 1, 2013 Tax Blog

Identity Theft, Tax Fraud, and Phishing

The IRS has made protecting tax payers, their refunds from identity theft, and the victims of such a top priority.  In 2012, the IRS more than doubled its employees who work on tax identity theft.  They also were able to prevent the refund of $20 billion in fraudulently filed refunds last year.  The IRS has arrested more than 100 people in connection to these crimes.  In January of 2013, they gave out 734 enforcement action against the targeted 389 suspects they focused on in that month alone.

Victims more often than not don’t learn that their identity was used to file fraudulent returns to claim a refund until they try to file their actual tax return and it is refused by the IRS.  The IRS urges taxpayers to quickly act and respond to notices from them that they might receive, so that they can start the process of correcting and securing your tax account and identity.

The IRS additionally urges taxpayers to not respond to emails or electronic media that appears to come from them.  This is referred to as “Phishing”, and is a method used to gain information needed to steal your identity.  No matter how official it may appear the IRS does not initiate contact with taxpayers electronically.  They will not electronically ask for pertinent personal information either.

Any suspicious correspondence should be forwarded to the IRS at phishing@irs.gov.

For more information on identity theft and fraud, visit www.irs.gov and click on their “Identity Theft” link at the bottom of the page.

If you suspect you have been the victim of identity theft and fraudulently filed tax refunds, call the IRS Identity Theft Hotline at 1-800-908-4490.

For more information on phishing, visit www.irs.gov and click on “Reporting Phishing” link at the bottom of the page.

For more information visit our website at www.dncpas.com or give one of our friendly tax accountants a call at 239-261-8337. Davidson and Nick CPAs has been serving Southwest Florida in helping individuals and businesses as CPAs and most trusted advisor since 1989.